Fragrances and Scents for High Margins

Nov 1, 2009

For centuries, fragrances and scents have been used to establish a mood or change one. That is as true today as it ever was. Women and men look to perfume and scents for a crowning touch of luxury. The market for home fragrance products has become equally important. According to a consumer insights study by Unity Marketing in Stevens, PA, 80 percent of American adults purchase products to make their homes smell good. "The most profound shift that has occurred in the consumer market is that having a pleasant smelling home is not just for special occasions anymore. People expect their homes to be nicely fragranced everyday. Buying and using home fragrance products, which used to be an occasional luxury, is becoming a necessity for more Americans," said Pam Danziger, president of Unity Marketing and author of, "Let Them Eat Cake: Marketing Luxury to the Masses - as well as the Classes."

The ascendance of fragrances and scents for both genders and for home owners at every market level presents retailers with an excellent opportunity for sales that carry high profit margins. Fragrances and scents are available across a wide range of price points, giving retailers at all levels an opportunity to maximize holiday sales and keep buyers coming back all year long. Genuine designer brands stand at the top end of the perfume market and command the highest retail prices, while look a likes and off brands provide greater affordability, and incense and fragrance oils go for prices that make them easy impulse buys and high demand stocking stuffers.

Fragrance Secret Inc. in Hicksville, NY carries only (and virtually all) designer brands. "We have about 1,000 different brands for men and women, including all the collections bearing designer names, along with minis and testers," says Shavana Harridass, shipping manager. Among the most popular, Harridass lists lines by Tommy Hillfiger, Dolce & Gabana, Ralph Lauren, Calvin Klein, Burberry and Carolina Herrara, Ed Hardy, Estee Lauder, Liz Claiborne, Bulgari, John Paul Gautier and Issey Miyaki, "although all do well," she adds. Typically, they come in 3.4 ounce bottles. At the mid level among the designer brands is Calvin Klein's Eternity. The men's version wholesales for $24, and the women's for $24.50. The suggested retail price is over $60.

Fragrance Secret does not require a minimum order. "However, when buyers order 24 pieces or more of the same fragrance, between 25 and 50 cents is deducted from the wholesale cost, sometimes more," she says. Ralph Lauren's Romance for men and women wholesales for $38 and $45, and the suggested retail price is in the $70 range. At the lower end of this high end designer market is the Addidas brand, which wholesales for around $12 or more and has a suggested retail of about $40. Chanel stands at the top of the line. "It has less of a margin than some others," Harridass explains, "but has a hefty retail sales price." For example, a Chanel gift set wholesales for $75 and retails for more than $100. "We offer many gift sets that include perfume, body lotion and a travel size in an attractive bag. The wholesale and retail varies by brand, but they are very popular gifts," she notes.

The company also offers a variety of small vials of designer brands. "This allows retailers to offer gift with purchase promotions," she explains. "This can be a great motivator among consumers." Retailers can pick and chose among the many brands at Fragrance Secret. "We will also guide them toward which brands sell best in which parts of the country, and to what age groups," she says. Harridass also notes that these brands are backed by very visible slick advertising campaigns in print and on television. "This helps create demand," she points out.

While Ultimate Division 2006, based in Miami, sells all of the original designer brands, it also sells three different lines of what Sharice Mosley, head of sales, calls, "renditions," which are manufactured in Europe and patterned after the original designer fragrances and packaged in bottles that resemble the originals. The three different lines, Lynn Young, Omerta and Real Time, each contain many of the different original renditions, and each is geared to a different price level, Mosley explains. She suggests that retailers who carry these lines not compare them with the originals, but rather let customers know, "they have a nice line at a good price," she says.

The contrast in price is significant. For example, among Ultimate Division 2006's original designer lines are Juicy Couture, Sean Jean, Paris Hilton, Vera Wang, Chanel, Burberry and others. A 3.4 ounce bottle of Juicy Couture wholesales for $51, and the suggested retail price is $120. The same size bottle of a Chanel brand wholesales for $60.95 and has a suggested retail of $130. There is also a Cartier gift set that includes a bottle of fragrance and a bottle of body milk, packaged in an attractive box. The wholesale cost is $30.50, and the suggested retail price is $65. The minimum order for original designer brands from Ultimate Division 2006 is $200 for an assortment of brands.

By contrast, the wholesale price for a bottle under the Lynn Young line is $5.95. It is $3.95 in the Omerta line, and just $2.50 in the Real Time line. "The retail price is entirely up to the retailer and his or her assessment of the individual market," Mosley says. The minimum order for Lynn Young and Omerta brands is a case of 12 units, and the minimum for Real Time lines is a case of 24 units. "For Lynn Young and Omerta we have a displayer that holds 200 units and wholesales for $250," she says. "We also offer a variety of free posters and signage."

Sassy Perfume in Los Angeles also carries original designer brands, but its specialty is off brands, according to Shawn Feradouni, part owner. "A few of the off brands are designer look a likes," she says, "but the majority are not, and all are exclusive to us." There are about 120 different fragrances for men and women. Feradouni says, "Sales of men's and women's are split 50/50. Men's sell at exactly the same rate as women's. "The benefit of off brands in this economy is that people who want perfume, and that's nearly everyone, can buy a good fragrance for $10. We're already seeing that this is a great holiday for off brand fragrances."

The minimum order is 12 units of the same item. In that quantity, the wholesale price ranges from $3 to $6, depending on the fragrance. The suggested retail price can range as high as $35, but even at a discount, retailers get a hefty markup. All of the company's off brand fragrances are packaged in beautiful glass bottles, which are packaged in individual boxes or cans. "Off brand success is all about packaging," Feradouni says. "There is a high percentage of fragrance in the formulations, and the scent lasts a long time." She suggests that retailers put displays in the store window and promote and advertise these for $9.99. "This is a price that grabs attention," she notes. "It pulls a lot of customers into the store, and once they are there, they often cross over to buy the more expensive brand names."

What's good for the body is great for the home. And in general, home fragrances such as incense and oils are extremely affordable for both retailers and consumers, and also offer retailers a very hefty markup. Two companies have assembled display programs that make it easy for retailers to capitalize on this quick selling category. They are Virji Imports USA in Englewood, CA, and Miracle Incense Company in West Sacramento.

In all, Virji Imports carries 500 different fragrance oils, including aroma therapy and body oils. A one ounce bottle typically wholesales for 70 cents, and the suggested retail price is $1.50 to $1.99, according to Ashraf Virji, owner. "We've put together a free compact displayer that contains 48 bottles in a case, and the retailer can choose from among an assortment of 64 different best selling fragrances," he says. His company also offers 90 different incense fragrances, including the most popular in fruity, floral, provocative and Asian themes. These are available in sticks and cones. The sticks are sold in a box of 25 sticks at a wholesale price of $5, and the suggested retail price is $25 for the box. There is a free wooden rack that holds 20 boxes, and the retailer can choose the fragrances. In addition, Virji offers a free display that holds 48 different cones for $22. That translates to a wholesale cost of 40 cents each, and the suggested retail price is $1 to $1.50.

The minimum order is $100, and can include a mix of any of the company's products. To raise the retail ticket, Virji carries a broad selection of decorative coffins and incense burners in ceramic, soapstone and wood. For example, there are six different designs of a soapstone incense burner which wholesales at $48 per dozen. The suggested retail price is $14.95 each. Some specialty decorative burners, such as ones shaped like dolphins or an elephant, wholesale for $3. They are sold in single quantities, and the suggested retail price is between $24 and $29. "These accessories help draw attention to the incense and fragrance oil section," Virji says. "And they also lead to significantly higher sales tickets. They make great gifts."

Byron Miracle, owner of Miracle Incense Company, says, "We build our own displays, and I believe they're the best in the industry." There are many available for this company's 11 and 19 inch incense sticks and one and two inch cones, which come in a choice of 65 fragrances. One start up kit for 11 inch incense sticks wholesales for $200 and includes 30 bundles of incense to fill the rack, another 10 bundles of the best sellers and back up, two coffin boxes, six flip top boxes, plus 12 free ash catchers and 300 free incense bags.

"The beauty of selling quality incense is that it gives retailers the opportunity to carry unique fragrances that stand out from the competition with a very affordable product that provides a big mark up. A three cent wholesale stick retails for 10 cents," Miracle notes. "Because of the recession," he adds, "a lot of higher end products are not selling that well, but even on a slow day, incense sells." Furthermore, he points out that, "Incense is a consumable. It brings customers back to the store."

Among the company's current best sellers are China rain, lick me all over, sex on the beach and Egyptian musk, according to Miracle. The company calls for a $50 minimum. "Retailers are watching their expenditures," he reasons, "and we make it easy for them to buy, sell through and replenish." He also notes that a $1 incense sale, "makes a great stocking stuffer. What's more, while people like to have fragrance in their homes all year round, they are especially eager to create a pleasant aroma in their homes at holiday time."

Miracle has recently added a new product, the Tornado air freshener, which is a concentrate that eliminates smoke odor. It comes in a two ounce spray bottle and a choice of 24 different fragrances. They include cocoa mango, nag champa and sandalwood. The wholesale cost is $2, and the suggested retail price is $5. There is a countertop display unit that holds six bottles each of eight different fragrances, and comes free with an order of 48 bottles. It's another stocking stuffer with high impulse appeal.